Digital rights management (DRM)
It is a systematic approach to copy right protection for digital media. The purpose of DRM is to prevent unauthorized redistribution of digital media and restrict the ways consumers can copy content they’ve purchased.
DRM products were developed in response to the rapid increase in online piracy of commercially marketed material, which proliferated through the widespread use of peer-to-peer file exchange programs. Typically, DRM is implemented by embedding code that prevents copying, specifies a time period in which the content can be accessed or limits the number of devices the media can be installed on.
PRODUCTION AND DISTRIBUTION COSTS
Production cost
Production cost refers to the cost incurred by a business when manufacturing a good or providing a service. Production costs include a variety of expenses including, but not limited to, labor, raw materials, consumable manufacturing supplies and general overhead. Additionally, any taxes levied by the government or royalties owed by natural resource extracting companies are also considered production costs.
Distribution costs
Distribution cost are usually defined as the costs incurred to deliver the product from the production unit to the end user. Expenses relating to the transportation of goods from production locations to customers, resellers, or other destinations. Changes in the distribution cost can have an effect on the final sale price of the product, as factors such as shipping costs, tolls, warehouse fees, inventory taxes, and other expenses
Digital technology changes two significant costs faced by a publisher of content:
- (Re)production costs. Digital technology dramatically reduces the cost of making perfect reproductions.
- Distribution costs. Digital technology allows these reproductions to be distributed quickly, easily, and cheaply.
Example
- A tape recorder offers a cheap way to copy music, but it is just as expensive to distribute a copy of a cassette as it is to distribute the original cassette. The tape recorder lowers the cost of copying, but not the cost of distribution.
- A black and white photocopy of an art book may be a cheaper method of distribution, but it is not nearly as valuable to potential users as the original full-color book. In this cases, the distribution costs are reduced, but the quality of the reproduction is much worse than the quality of the original.
Strategies for Lower Distribution Cost
Don’t fight against lower distribution costs; take advantage of them. Reduced distribution costs offer you a significant advantage by allowing you to promote your products more effectively
1.Giving Away Your Content
Information good is an “experience good”: consumers don’t know what it is worth to them until they experience it. By “giving away” at least part of the content, end up making a lot more money.Give away only part of your product. This is like the old marketing tactic of offering free samples of consumer products, but updated for the digital age
The trick is to break your product up into components; some you give away, others you sell. The parts that are given away are the advertisements—the infomercials—for the parts you sell.Cheap versions (which can even be free) serve as advertisements for the high-priced versions
2. Demand for Repeat Views
For some sorts of information—music, for instance—repeated plays are very important.If you hear a song on the radio that you like, you may want to hear it again right away.But if you read a novel—even one that you enjoy very much—you are unlikely to want to read it again in the near future.
The radio broadcast of a song is an ad for itself—or, more accurately, it’s an ad for a more conveniently packaged version of itself.This means that giving away a single view of the product is often an attractive marketing strategy for information goods targeted at the children’s market.The desire for repetition is common among children. There is something very comforting to a child in reading the same story, or hearing the same song, or seeing the same video over and over and over again.
3.Similar, but Not Identical, Products
- A closely related strategy has to do with giving away samples to sell similar, but not identical, products.
- Free Antivirus vs paid version
4.Complementary Products
Give away index and sell content (free organization, not-free content).One attractive idea is to give away an index or table of contents and to sell access to the main material.Wall Street Journal, New York Times, Elsevier, Economist give away index (pay to read more)
Illicit Copying Problem due to the above strategies
First, information that is timely, or that people tire of quickly, is less susceptible to illicit copying.
- Stock, News
Second, bootleggers have the same problem that any other sellers of contraband material have:
- They have to let potential customers know how to find them.
- But if they advertise their location to potential customers, they also advertise their location to law enforcement authorities.
- Bigger they are, the easier to detect à natural limit on the size of for-profit, illegal copying.
Lower Reproduction Costs
Let us turn now to the other significant cost factor charged by digital technology: –Reproduction.
Digital copies are perfect copies of the original.For digital content, production is reproduction.
Strategies for Lower Reproduction Cost
- Encryption
- License Control / Access control
- Digital certificates
- Watermarking
- Rights specification language
- Hashing
Trusted System
Trusted system is a system that is relied upon to a specified extent to enforce a specified security policy. This is equivalent to saying that a trusted system is one whose failure would break a security policy (if a policy exists that the trusted system is trusted to enforce).
The meaning of the word “trust” is critical, as it does not carry the meaning that might be expected in everyday usage. A system trusted by a user, is one that the user feels safe to use, and trusts to do tasks without secretly executing harmful or unauthorized programs; while trusted computing refers to whether programs can trust the platform to be unmodified from that expected, whether or not those programs are innocent, malicious or execute tasks that are undesired by the user.
Trusted systems in the context of information theory is based on the definition of trust as ‘Trust is that which is essential to a communication channel but cannot be transferred from a source to a destination using that channel’
Historical Example Lesson: Growing the Market
The book producers in 1800 and the video producers in 1980 didn’t appreciate how dramatically the market could grow.Publishers used to dealing with a wealthy elite didn’t foresee that literacy would dramatically increase if there was something interesting to read.
Hollywood producers didn’t recognize that VCRs would become a mass-market item if popular content was available for them.
The natural tendency is for producers to worry too much about protecting their intellectual property.The important thing is to maximize the value of your intellectual property, not to protect it for the sake of protection.If you lose a little of your property when you sell it or rent it, that’s just a cost of doing business, along with depreciation, inventory losses, and obsolescence.
Choosing Terms and Conditions
- More liberal terms and conditions for intellectual property right increases value of goods.
- A product that can be shared with friends, loaned out, rented, repeatedly accessed, or sold in a resale market is obviously more valuable to a potential user than one that can be accessed only once, under controlled conditions, by only a single party.
- The more generous the terms on which you offer your intellectual property, the more you can charge, but the less you sell.
- Try to maximize the value, not the protection.
LESSONS
- Digital technology poses two challenges for rights management. First, it reduces the cost of making copies. Second, it allows the copies to be distributed quickly, easily, and cheaply. These challenges also offer opportunities.
- Reduced distribution costs help to advertise your product by making it cheap to give away samples. This is useful when there is significant demand for repeated views or for closely related content. Giving away samples helps to sell more content.
- Reduced distribution costs are beneficial to those who sell illicit copies as well, but their need to advertise helps keep “bitlegging” under control. A bitlegger that gets too big and attracts too much attention will soon be caught.
- Copy protection schemes impose costs on users and are highly vulnerable to competitive forces. Trusted systems, cryptographic envelopes, and other copy protection schemes have their place but are unlikely to play a significant role in mass market information goods because of standardization problems and competitive pressures.
- When choosing terms and conditions, recognize the basic trade-off: more liberal terms and conditions will tend to raise the value of your product to consumers but may reduce the number of units sold. The trick is to pick the terms and conditions to maximize the value of your intellectual property, not to maximize the protection. •
- Site licenses and other group-pricing schemes are a valuable tool for managing terms and conditions. They economize on transaction costs for both the buyer and